The Truth about Gift Cards, Irish Shoppers & “Experience” Gifts

Gift Vouchers, Irish Shoppers and “Experience” Gifts


Irish consumers have a warm relationship with gift vouchers. In a recent Virgin Business survey of over 1,000 Irish shoppers, 54.4% said that they were either “somewhat” or “very” likely to buy an experience voucher as a Christmas gift this year.

The same survey saw money as the number one most in-demand gift, suggesting that most consumers would rather choose their Christmas present for themselves. And, in a contradictory twist, a small majority (54.5%) agreed with the statement: “When I buy a voucher as a gift for someone, I worry that it might come across as impersonal.” With more than half buying vouchers, that means that there is a contingent buying them as gifts despite believing that they don’t have the personal touch!


Evolution of the Voucher


Irish consumers’ passion for vouchers is consistent with other major markets. In 2015, 95% of Americans in a survey said they’d either given or received a gift voucher.

Gift vouchers are so ubiquitous that it’s hard to pinpoint where and when they began, but the video rental chain Blockbuster was the first to bring it to a mass market in 1995. Starbucks gave it a big boost, with reusable cards that you could top up (then innovative, now commonplace) in 2001.

In Ireland, most major bars, restaurants, spas and hotels have some kind of gift voucher system in place. And many are involved in multiple-outlet vouchers (like One4All). More recently, the gift voucher has expanded to include “experiences” from spa days to meals to helicopter rides to stadium tours.


Advantages of Gift Cards


For the customer

Vouchers alleviate some of the financial pressure that Christmas can bring. Our own Virgin Business survey found that after gifts (at 58.6%), the other biggest Christmas expenses were groceries (19.5%), pubs (13.5%) and restaurants (7.1%). A voucher can help with any of those things, especially in the week following Christmas or the lean January.

They’re incredibly effective as last-minute gift items too, especially with online shopping. Theoretically, if you have a credit card and access to the internet, you could buy your gifts on Christmas morning. There are even articles online listing what vouchers to buy, and who to buy for.

And, of course, they have almost the same versatility of cash, but with a marginally more personal touch.

Is it any wonder that Irish consumers spend an estimated €350 million a year on them?

For the business

Every consumer business, especially bars and restaurants, should have the service available: It should be considered an essential utility like electricity or good internet connectivity.

A voucher encourages foot-fall, spreads word of mouth and – perhaps most interestingly – spending often exceeds the voucher: One survey found that 72% of consumers spend beyond the voucher’s value with their own money. This makes sense – if you’re getting €100 towards a meal, what’s another ten?

Some say that the fact that the voucher is going unspent is a good thing: Literally billions of euros in vouchers go unspent every year worldwide. Closer to home, Pricewatch (researching for the Consumer Association) found that 15-20% of vouchers in Ireland go unspent. But we would argue that the positive customer experience of (essentially) a free meal or experience brings value to the business in that it builds a relationship with the customer. Our survey found that after price (at 30.8%), “previous good experience” (22.1%) is what customers value most.


Perils of Vouchers


With any good product or service, market saturation is probably inevitable. If you run a voucher-based business (such as a survey site or an online voucher store), that means that competition is tough.

Perhaps more concerning is the scammers and poor customer service that give gift vouchers a bad name. In recent months, Fianna Fáil TD Niall Collin complained that 2/3rd of the market is not being regulated. He pushed the Oireachtas to put forward a bill that would make all gift vouchers automatically valid for 5 years.

Then there’s the peril of legacy cards: When HMV was purchased by Hilco Capital, there were thousands of euros worth of old gift vouchers already in circulation. The new owners were expected to honour these old vouchers, with the customers essentially acting as unsecured creditors. On balance, they had to take the hit to maintain the positive customer relationship.


Best Practice in Vouchers


Gift vouchers are not going anywhere soon. With online purchasing, loyalty schemes and paperless payments on the rise, it looks like the arrow on the graph will continue climbing upwards.

To maintain that good will, businesses can take a few steps to avoid gift voucher pitfalls:

1- Give generous expiry dates (if any)

The pressure and obligation of a looming expiry date can mean stress for the gift recipient and a bad impression for the business. Anything less than a year is a recipe for such resentment. Ireland’s Consumer Protection Commission recommends having no expiry date.

2- Be aware of your products’ cost

If a gift voucher expects the recipient to spend more money than they’d like, that’s a bad gift. To illustrate: If you run a restaurant where a typical bill runs to about €50, do not sell vouchers for €25.

3- Go easy on terms and conditions

As this is a relatively unregulated industry in Ireland (for now), some customers have complained about unfair Ts & Cs: For instance, it’s good practice to give change for a voucher, even if it’s change in the form of another, smaller voucher. Allow them to be used during sales. Let customers use multiple vouchers together, especially if it’s an expensive or ongoing service (flights, hotel stays or driving lessons, for example).

This Christmas, millions of euro will be spent on vouchers for Irish shops, restaurants, hotels, bars and other businesses. The best way for businesses to maintain this momentum is to treat these vouchers as a gift for everyone; the customer gets a nice present; while the business gets an opportunity to impress them.


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